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You estimate that it will take five years to complete your college education. Your parents want to invest enough money today at 12 per cent to enable you to withdraw $5000 at the end of each year for the next five years with nothing left at the end of the five-year period. How much money do they need today?

User Piotrga
by
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1 Answer

0 votes

Answer:

the present value is $18,025

Explanation:

The computation of the amount that should be needed today is given below:

Given that

NPER = 5

RATE = 12%

PMT = $5,000

FV = $0

The formula is shown below:

=-PV(RATE,NPER,PMT,FV)

AFter applying the above formula, the present value is $18,025

User Robert Balent
by
5.3k points
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